Specialist shopping centre real estate investment trust Hyprop, which owns malls such as Mall of Rosebank, Hyde Park Corner and Canal Walk, has already moved on its new strategy announced in March of reducing its exposure in other sub-Saharan African countries (SSA).
Hyprop chief executive Morné Wilken said in a pre-close briefing on Friday that the group wished to focus on its South African and Eastern European (EE) businesses.
AttAfrica, in which Hyrpop owns a 37.5percent stake, had disposed of its interests in Achimota Retail Centre in Ghana for an undisclosed sum in the period since March.
“Hyprop initiated, negotiated and concluded the transaction,” said Wilken. At December 2018, the group reported an impairment in the SSA portfolio of R1.07billion and cautioned of right-sizing of malls in the portfolio down the line.
The sale was done at the December 2018 book value, and Hyprop would use its share of the proceeds to reduce debt. The SSA portfolio now comprises 7.5percent of Hyprop’s global property portfolio, down from 8.3percent before the transaction. The remaining SSA investment comprises stakes in Accra Mall and West Hills Mall in Accra, Ghana; Kumasi City Mall in Kumasi, Ghana; Manda Hill Centre in Lusaka, Zambia; and Ikeja City Mall in Lagos, Nigeria.
Hyprop and the shareholders of AttAfrica intended to further reduce exposure to SSA and the sale of another shopping centre was expected soon, while Hyprop was dealing with several parties about the sale of the four other shopping centres.
“The disposal of Achimota Retail Centre will reduce Hyprop’s US dollar debt and impact positively loan to value, while at the same time enabling us to focus on SA and EE.”
At December 2018, distributable income grew by 8.8percent in the SA portfolio and by 16.6percent in the EE portfolio.
“Despite tough times for retailers, vacancies in our SA portfolio remain on a sustained decline and, at one percent of the portfolio, are well below the industry average, and the EE portfolio is almost fully let,” said Wilken.
“In SA, we aim to reposition malls, partner with tenants and apply a portfolio approach to dealing with tenants, while in EE we are looking at strengthening the entertainment and food offering and securing rights of extensions.” Since March, Hyprop raised R4bn in three months.
“From a debt perspective, we remain confident of our ability to continue refinancing loans and raising capital as necessary,” said Wilken.
Looking ahead, Hyprop planned to reduce LTV and restore its long-term investment-grade rating, while the measures implemented boded well for an improvement in Moody’s outlook.
Edcon accounts for 7.6percent of Hyprop’s total gross income and 9.4percent of its gross lettable area.
“We have a proven track record of successfully re-tenanting major tenant spaces following the closure of the Stuttafords chain in 2017 and have already reduced our Edcon exposure by 8630 square metres,” said Wilken.
“Our focus areas include continuing to improve trading densities, minimising the impact of reversions, and identifying new potential revenue streams in SA, while in EE we will increase value through asset management initiatives and improved clarity on financial reporting.”
Hyprop’s share closed 0.19 percent lower at R69.87 on Friday. The share price has declined steadily since August 2016, when it was trading at more than R140.